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Islamic Finance

Assalamu alaykum,

I am a software developer currently in the recruitment process. The company generally has projects that are halal, but they are offering me a project with an insurance company, working on insurance management software from client to user. This project has been running for five years and will likely continue for a longer period.

Are all projects with insurance companies considered haram, or are some permissible? What questions should I ask to determine whether this project is allowed or not?

Summary

A scholarly ruling on whether software development work for insurance companies is permissible in Islam, explaining the difference between commercial insurance and cooperative (takaful) models, and outlining clear criteria a Muslim software developer should use to assess permissibility.

Answer

باسم الله، والحمد لله والصلاة والسلام على رسول الله



The majority of contemporary scholars hold that commercial insurance (التأمين التجاري) is ḥarām, because it involves:


  1. Gharar (excessive uncertainty)
  2. Ribā (interest)
  3. Maysir (gambling)


Only cooperative/takaful insurance (التأمين التعاوني / التكافلي), structured on tabarruʿ (donation) and mutual assistance, is considered permissible when it is genuinely compliant.


Regarding working on insurance software, the ruling does not depend only on the industry name but on what your work directly facilitates.


If the software:


  1. Manages commercial insurance contracts
  2. Calculates premiums, claims, penalties, interest, and risk pricing
  3. Automates or enhances haram transactions;


Then working on it is generally not permissible, because it constitutes direct assistance in sin.


Allah says:


وَتَعَاوَنُوا عَلَى الْبِرِّ وَالتَّقْوَىٰ وَلَا تَعَاوَنُوا عَلَى الْإِثْمِ وَالْعُدْوَانِ

“And cooperate in righteousness and piety, but do not cooperate in sin and transgression.”
(Surah al-Mā’idah 5:2)


And the Prophet ﷺ said:


«إِنَّ اللَّهَ إِذَا حَرَّمَ شَيْئًا حَرَّمَ ثَمَنَهُ»

“When Allah forbids something, He forbids its price (earnings) as well.”
(Reported by Aḥmad and Abū Dāwūd – ṣaḥīḥ)


Accordingly, Scholars differentiate between:


  1. General infrastructure work (e.g. neutral IT systems, unrelated maintenance)
  2. Direct operational support of ḥarām contracts


Regarding your scenario, a software developer building or maintaining insurance management systems is usually considered directly involved, not peripheral, because:


  1. The system exists solely to operate the insurance contracts
  2. Without it, the prohibited activity cannot function efficiently


If you are assessing whether this specific project may be permissible, ask all of the following:


A. About the insurance model


  1. Is this commercial insurance or cooperative (takaful)?
  2. Is it supervised by a Sharīʿah board?
  3. Are contributions treated as donations, not premiums?


B. About your role


  1. Will I be developing features that:
  2. Calculate premiums or interest?
  3. Process claims and penalties?
  4. Manage underwriting or risk pricing?
  5. Is my work essential to operating the insurance contracts?


C. About separation


  1. Can I be fully isolated from insurance-related modules?
  2. Is reassignment to a halal-only project realistically possible long-term?


If the honest answers show direct facilitation, then the project is not permissible, even if the company itself has other halal clients.

If the project is clearly commercial insurance, it should be avoided.

If the company offers halal projects, you should request reassignment.


If no reassignment is possible, please seek alternative employment, and only use from your salary what you need, and purify the rest by giving it to those in need or causes beloved to Allah. This would entail a transition plan while maintaining taqwā InShaAllah.


Alhamdulillah, Allah always replaces what is left for His sake with something better.


And Allah knows best.